Tag Archives: auto industry

The president of an automobile dealers association wrote a critique of President Obama’s October 13, 2012 weekly video address about the Auto Industry.

Peter Hodges, president of the Metropolitan Auto Dealers Association in Oklahoma City, OK wrote the following as a press release on October 18, 2012:

In President Obama’s October 13, 2012 weekly address he said broadly that the auto industry “was flat-lining” in 2008-2009 and on the verge of collapse. He was referring to Chrysler and General Motors as the “auto industry.” Yes, the auto industry was struggling. However, it is important to know that there are a total of 17 automakers that have 41 brands with over 17,000 dealerships that sell their automobiles in America. Two automakers out of seventeen do not make up the entire auto industry in the U.S.

The President said that “we refused to let Detroit go bankrupt.” Why would President Obama say this when he oversaw Chrysler and GM into bankruptcy? Chrysler filed chapter 11 bankruptcy on April 30, 2009 and GM filed chapter 11 bankruptcy on June 1, 2009.

The President said that, “auto sales are the highest they’ve been in four years.”But, he doesn’t say why. It is true that new auto sales are stronger today but, this is due to pent-up demand. What this means is consumers are simply making the new automobile purchases that they held off making in late 2008, 2009, 2010, and 2011. In metro Oklahoma City for example, compare those year’s new auto sales with 2007 (the last normal year for sales.) New auto sales were down -11.2% in 2008, down -31.6% in 2009, down -26.7% in 2010 and down -18.2% in 2011. Consumers held on to their cars longer than normal in those years because of a lack of confidence and lack certainty in the economy and marketplace. At some point, cars and trucks must be replaced. Since automobiles are in fact a need today, the consumer will replace their aging car or truck despite a prolonged bad economy.Therefore, auto sales have had a strong increase because of a simple need for reliable transportation and not because of confidence in the economy and marketplace. Metro OKC’s new auto sales in 2012 are estimated to be up 2.4% over 2007 due to pent-up demand.

President Obama said, “…we’re not just making more cars and trucks – we’re making better ones” and that “we”raised new fuel economy standards to“almost 55 miles per gallon.” Unfortunately, this political decision will also raise the cost of automobiles by more than $5,000 per vehicle.

What President Obama omittedfrom his address was that while he oversaw Chrysler and General Motors into bankruptcy he unnecessarily terminated over 2,200 new auto dealerships that were self-sufficient, family owned businesses. They were terminated under the false premise that they were an expense on their auto manufacturer.Terminated auto dealers cannot sell their closed properties and arestill paying off mortgages on them. The dealership closures caused 120,000 dealership employees to lose their jobs. The President also took away the pensions of at least 20,000 automotive related workers in Ohio during these bankruptcies. This injustice of dealership terminations was recognized by President Obama’s Special Inspector General on TARP, Neil Barofsky, who stated in an interview on CNBC in regard to his report on dealership terminations (SIGTARP) that, “This (Obama’s) Auto Team…didn’t have a single person on it who had any auto experience…We asked Ron Bloom, the head of (Obama’s) Auto Team, was this (dealership closures) necessary…and he acknowledged that this…wasn’t necessary.”

The auto dealers association position is my profession. The National Association of American Lay Catholics is the organization I founded to act on my passion to defend the Catholic Church with other Catholic lay persons.

In President Obama’s own White House weekly video address on October 13, 2012 he said the following:

“We refused to let Detroit go bankrupt.”

The problem with President Obama’s statement is that it is NOT TRUE. He oversaw Chrysler and GM into bankruptcy. Chrysler filed chapter 11 bankruptcy on April 30, 2009 and GM filed chapter 11 bankruptcy on June 1, 2009. President Obama’s “Auto Team” handled (but, caused great damage) these bankruptcies. Click here for that story.

Go to (0:54 or 54 seconds) in the video below to see President Obama contradict himself by saying, “We refused to let Detroit go bankrupt.”

†

†

For those of you unfamiliar with auto industry jargon, the name “Detroit” refers to the three Detroit, Michigan (or nearby suburbs) based automakers; Chrysler, Ford and General Motors (GM.) In this case, the President is only referring to Chrysler and General Motors. At times in this video he uses the phrase, “The Auto Industry” too broadly. Going beyond the size and scope of Chrysler and GM.

There are other inaccuracies and omissions in this video that need clarification like; the size and scope of the auto industry, correct interpretation of current auto sales, claims of saving one million jobs, the impact of higher fuel standards and dealership terminations. But, those clarifications are for another time.

An error like this from President Obama on White House video is striking. Because it is on a produced and scripted White House video, it shows me that the President doesn’t have the critical business knowledge needed for the job.

As a Catholic who works in the trade association profession in the auto industry it was unsettling to hear President Obama claim that he saved the auto industry. President Obama closed over 2,200 auto dealerships, which caused the losses of decades old family-owned businesses and over 120,000 jobs they provided. The closures were allowed to happen under the false notion that auto dealerships were an expense on their auto maker. The President ignored the fact that auto dealers are not an expense to automakers. Auto makers own none of what you see at auto dealerships. Auto dealers own all their property; the cars and trucks, parts, buildings, land, signs, everything. The dealerships pay their employee’s salaries and millions of dollars in taxes to state and local governments. The manufacturer has nothing to do with any of these things.

Facts:

President Obama purposefully and unjustly took away 2,200 self-sufficient, family owned businesses under the false premise that they were an expense on their auto manufacturer. He deliberately put these people in debt with no way to recover. Auto dealers still cannot sell their closed properties.

President Obama’s decision to close dealerships cost 120,000 persons their jobs and livelihood.

The President’s action defrauded auto dealers of their property rights and their employees of their wages.

**********[UPDATES to this post were made October 5, 2012. Updates are surrounded by red brackets and asterisks**]

[The video below is of the Special Inspector General speaking about the Auto Task Force’s (Obama’s) handling of the auto dealers. This was Obama’s own Inspector General, Neil Barofsky. He gets to the point quickly in this 9 minute video:

Click on the video below. Barofsky states in the video:

“This (Obama’s) Auto Team… didn’t have a single person on it who had any auto experience… We asked Ron Bloom, the head of (Obama’s) Auto Team, was this (dealership closures) necessary… and he acknowledged that this… wasn’t necessary.”

Below are important excerpts from the summary page (pg. 2) of the SIGTARP Report (Office of the Special Inspector General (Neil Barofsky) for the Troubled Asset Relief Program):

“GM and Chrysler significantly accelerated their dealership termination timetables, with Chrysler terminating 789 dealerships by June 10, 2009, and GM announcing plans to wind down 1,454 dealerships by October 2010.”

“(Obama) Auto Team’s view about the need for GM and Chrysler to reduce their dealership networks and do so rapidly was based on a theory that, with fewer dealerships (and thus less internecine competition), like their smaller networked foreign competitors, the remaining dealerships would be more profitable and thus would permit the dealerships to invest more in their facilities and staff.”

“one expert opined that closing dealerships in an environment already disrupted by the recession could result in an even greater crisis in sales… job losses at terminated dealerships were apparently not a substantial factor in the (Obama) Auto Team’s consideration of the dealership termination issue.”

” it is clear that tens of thousands of dealership jobs were immediately put in jeopardy as a result of the terminations by GM and Chrysler. Finally, the acceleration of dealership closings was not done with any explicit cost savings to the manufacturers in mind.”

“Treasury should have taken special care given that the (Obama) Auto Team’s determinations had the potential to contribute to job losses, particularly given that one goal of the loan agreements was to “preserve and promote jobs of American workers employed directly by the automakers and subsidiaries and in related industries.”

“This audit concludes that… (Obama) Treasury (a) should have taken every reasonable step to ensure that accelerating the dealership terminations was truly necessary… (b) should have at least considered whether the benefits to the companies from the accelerated terminations outweighed the costs to the economy that would result from potentially tens of thousands of accelerated job losses.”

See SIGTARP Report summary (page 2) for confirmation of the above excerpts and facts.]**********

The President’s actions against auto dealers violated the Catholic social teaching principles of social justice and the common good by removing owners rights to their property and defrauding workers of their wages. His actions (he calls it “shared sacrifice”) were an example of collectivism, centralized planning and socialism. All of these ideas are rejected by America and all are rejected by Catholic teaching in regard to the commandment, “thou shall not steal.”

Many people have forgotten what damage President Obama did to the auto industry and the auto dealer and their employees. Please remind them.